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Atlantic Yards/Pacific Park infographics: what's built/what's coming, who's responsible, + project FAQ/timeline (pinned post)

Developer essentially admits the obvious: 2025 affordable housing deadline won't be met. Will they get a pass on fines?

This is the first of ten articles on the 6/7/22 meeting of the Atlantic Yards Community Development Corporation. The second assessed an estimated 2031 completion date. The third addressed the impact of a potential Greenland default. The fourth concerned expectations of 421-a benefits. The fifth concerned the deadline for the Urban Room. The sixth addressed timing for the school. The seventh concerned plans for the platform. The eighth discussed community impacts of construction.  The ninth concerned plans for B12/B12 affordable housing. The tenth concerned the Open Meetings Law.

For the first time, a representative of master developer Greenland Forest City Partners (GFCP) essentially admitted the obvious: they have no plan to meet the May 31, 2025 deadline to deliver the required 2,250 units of affordable housing.

That requires 876 (or 877, depending on whether a super's unit counts) more apartments, and it's likely only one new building will be finished by then. That building, B5 (700 Atlantic Ave.), should have 682 units, with--I'd bet--30% of them (205) income-targeted, "affordable" to middle-income households.

But Scott Solish of Greenland USA for the first time hinted that the developer might ask Empire State Development (ESD), the state authority that oversees/shepherds Atlantic Yards/Pacific Park, for an extension or other accommodation. 

(That's my interpretation of his statements, as described below, and on video, in the sequence below.)

 

Solish noted that the guiding Development Agreement allows for a delay based on the unavailability of subsidies, though AY CDC Director Gib Veconi noted that the absence of the 421-a tax break--which was not renewed by the state legislature--does not necessarily qualify.

After all, the developer surely does not want to pay the $2,000/month fines for each missing unit, as negotiated in a 2014 settlement with the coalition BrooklynSpeaks, of which Veconi is a leader. 

That settlement averted a potential lawsuit on fair-housing grounds and allowed original developer Forest City Ratner to welcome a new majority investor, Greenland.

Solish and other project representatives have repeatedly asserted that they would meet their oblications. For example, Solish in November 2020 said the developer--which owns nearly all of GFCP--has not raised the possibility of an extension or exemption with ESD.

Potential scenarios

The looming 2025 deadline could lead to several scenarios, I speculate. It's unclear that the guiding Atlantic Yards Development Agreement governs the 2014 settlement, but, if so, the former offers a giant loophole for the developer, a Right To Refrain, which states:
ESDC [ESD] shall have the right, in its sole discretion, to refrain from exercising any of its rights under this Agreement at any time or from time to time.
The BrooklynSpeaks sponsors agreed in 2014 not to sue, at least if the agreement's provisions were adhered to. But if they're not, a lawsuit could pursue enforcement of those fines; the money would go to a trust fund for affordable housing.

Another possibility is that the ultimate plans for Site 5--a giant two-tower project across Flatbush Avenue from the arena, on the site of what were long Modell's and P.C. Richard--could include additional affordable housing as part of a renegotiation of various project terms.

There were no updates on Site 5 yesterday, however, though the developer, as I'll explain, described plans for the platform over the first of two railyard blocks, which would support three towers.

The loss of 421-a

As shown in the video, Veconi, the best-informed member of the generally ineffective AY CDC--some of whose directors did make useful inquiries yesterday--noted that, at a community meeting last month, Solish mentioned that the provision of the remaining affordable housing was dependent upon the renewal of 421-a.

That didn't happen in the recent legislative session--though, presumably, the real-estate industry will aim to bring it back in some form.

"It is my understanding from the Master Development Agreement," Veconi said, "that there is no dependency on any financing or tax abatement for completion of the project's affordable housing commitment. Is that your understanding as well?"

Solish responded, in a low-key manner, "I think there's specific things in the document that cover the availability of financing for affordable housing and also project financing."

"There are," Veconi said, "but none of them stipulate that you must have tax subsidies, you must have subsidies or abatements to complete your commitment. Do you feel otherwise?"

Solish said, "I think the document speaks for itself."

Looking at the Development Agreement

The document states that, if the developer is ready to commence construction, it must substantiate via a written notification an "Affordable Housing Subsidy Unavailability, which extends the applicable deadline by a year. (Those deadlines for affordable housing were established before the 2014 settlement, however.) That deadline can be extended.

For buildings not required to contain affordable housing, the developer can also claim a Market Financing Unavailability. That can be up to a year, and can be extended.

However, the document states that, to "obtain financing for Affordable Housing Units under programs then generally available to developers of Affordable Housing Units," the developer must fill out an application with administering agencies. 

Affordable Housing Subsidy Unavailability is defined as the inability to obtain "financing under such programs for Affordable Housing Units then generally available to developers of Affordable Housing Units." That's not the same as qualifying for a tax break--though let's see if that argument is made.

"The period of delay caused by any occurrence of any Affordable Housing Subsidy Unavailability shall not be deemed to commence any earlier than ten (10) days before the date ESDC receives notification," the document states.

The May 2025 deadline

Veconi also brought up the May 2025 deadline for affordable units: "That's less than three years away. Scott, do you envision completion— how do you envision that requirement to be met in three years?"

"I think we're building as hard as we can," Solish responded, avoiding a direct answer.

"And we've, we've built as hard as we can and as fast as we can, given the conditions in the city and the world over the last ten years," he continued. "So I think we're a very exciting point now. We've done a lot of construction over the last several years and continue to deliver on our agreements. And as I just outlined, we're just about to commence the next phase of development that allows us to build the next phases of buildings, and we're eager to to get them done."

(Could they invoke Unavoidable Delay, including "acts of God," which presumably might include the COVID-19 epidemic? Who knows, but they haven't brought it up yet and the period does not start until ESD is informed.)

"Okay," Veconi responded, "but do you do you have milestones identified now that would show that the remaining—there's 877 apartments left and that most of the buildings were looking at a moment ago that has to be done in less than three years. Do you have milestones identified for achieving that goal in three years?"

"What do you mean by milestones?" Solish said, deflecting the question.

"Well, things that have to be done at a certain point in time in order to make that date, like completion of the platform, you know, financing everything else," Veconi said. He asked if, in a year, they'd be having the same discussion, "or are there interim steps that you'll be able to report on?"

Solish, "I mean, I think the interim steps that you'll see are the actual progress on the project site."

Will ESD push?

At a December 2021 meeting of the AY CDC, ESD expressed no qualms about being able to meet the deadline.

Then-ESD executive Marion Phillips III (who served as AY CDC President). said, “The goal still is 2025. They're working towards that goal. They have not approached ESD about changing that goal. And so at this point, we believe they will meet their goal. If not, as you all know, there are penalties in our agreements and we'll, you know, obviously execute those penalties when appropriate.”

That's dubious, as I wrote. After all, at the previous AY CDC meeting in March, then-ESD Chair Steven M. Cohen raised the possibility of a legislative “fix” regarding the obligation. 

At a March 2019 meeting of the AY CDC board, Phillips claimed that ESD is "very serious" about the affordable commitment.

"They have a responsibility, and we plan to hold them to a responsibility, for 2,250 units," he told Veconi. "Y'know, your request for them making a projection I think is helpful and useful, but at the end of the day, the commitment of meeting the goal that we set is nonnegotiable on our end."

"Can you say that [housing total and deadline] will never be negotiable?" Director Cy Richardson asked Phillips.

Phillips' response began with a few weasel words. "At this point, I'm very clear, [ESD head] Howard's [Zemsky] very clear, we're not negotiating that number down, at all. I have been given very clear instructions that we're not negotiating that number."

Zemsky's gone, Phillips is gone, and there's a new governor.

Richardson said, "I would like every opportunity to remind the broader community, defined as you would like, of this master commitment... Because I don't want it to be too late when these things have to be renegotiated."

"That's fair," Phillips said.

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